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Barclays chairman Sir David Walker defends bank's bonus increase Barclays wins shareholder vote over pay
(about 5 hours later)
Barclays’ chairman Sir David Walker defended the bank’s decision to increase bonuses amid the ire of shareholders. Barclays shareholders have given the green light to a controversial remuneration plan to widen the bank's bonus pool despite opposition to the pay package.
Walker, due to step down later this year, told investors at today’s annual meeting on the South Bank that the 10% rise in bonuses paid out for last year was partly due to the fact that there had not been the scale of clawbacks seen in 2012 as a result of various fines and settlements with regulators. The majority of the bank’s shareholders voted in favour of the move to increase its staff bonus pool by 10% to £2.38bn at Barclay’s AGM on London’s Southbank today.
Barclays chief executive Antony Jenkins also had good news for shareholders, saying that cost cutting had had “a material effect” in the first three months of this year. That would  counter falling revenues in its fixed-interest, currencies and commodities trading business leading to a “small reduction” in first-quarter profits. This appeared to be better than some  analysts had feared and Barclays shares rose more than 1%. Some 34% of shareholders failed to back the report including large institutional investors Standard Life and fund manager F&C Investments.
Walker, right,  said the bank had had to defend its business as the number of its investment bankers in the United States lured away to rivals doubled in 2013. That saw bonuses rise 10% to £2.38 billion last year despite a 32% fall in pre-tax profits. The bank reported 7.1 million shares were cast in favour, 2.24m million opposed it and a further 1.4 million votes were withheld.
The outgoing head of Barclays’ remuneration committee, Sir John Sunderland, was heckled by shareholders after he hit out at Standard Life for going public with its opposition to the bank’s controversial pay awards.
Alison Kennedy of Standard Life Investments said the decision to vote against the company’s remuneration report had not been taken lightly “but, on balance, [we] believe this was the right thing to do.”
She added: “We are unconvinced that the amount of the 2013 bonus pool was in the best interests of shareholders, particularly when we consider how the bank’s profits are divided amongst employees, shareholders and ongoing investment in the business”.
Sunderland replied that he would have appreciated the pensions firm making its objection during an earlier consultation process. One shareholder shouted “you don’t care” after Sunderland said it had been anticipated the decision to hike bonuses by 10% would be controversial.
“Compensation in the financial services industry is far too high but we cannot take the risk of acting unilaterally,” said Sunderland.
“Do you imagine we want to pay anyone in the bank more than we have to? Do you imagine I and the chairman seek the level of invective that has been poured upon us?”
Barclays’ chairman Sir David Walker also defended the bank’s decision to increase bonuses. Walker, due to step down later this year, told investors that the 10% rise in bonuses paid out for last year was partly due to the fact that there had not been the scale of clawbacks seen in 2012 as a result of various fines and settlements with regulators.
Barclays chief executive Antony Jenkins also had good news for shareholders, saying that cost cutting had had “a material effect” in the first three months of this year. That would counter falling revenues in its fixed-interest, currencies and commodities trading business leading to a “small reduction” in first-quarter profits. This appeared to be better than some analysts had feared and Barclays shares rose more than 1%.
Walker said the bank had had to defend its business as the number of its investment bankers in the United States lured away to rivals doubled in 2013. That saw bonuses rise 10% to £2.38 billion last year despite a 32% fall in pre-tax profits.
He added: “We took our decisions on remuneration in the belief it was  necessary to protect our franchise. I am confident we took the right  decision.”He added: “We took our decisions on remuneration in the belief it was  necessary to protect our franchise. I am confident we took the right  decision.”
But the bank faced huge criticism at today’s meeting.Kieran Quinn, chairman of the Local Authority Pension Fund which represents funds totalling £120 billion, said: “There have been significant concerns expressed by LAPF over governance and executive remuneration at Barclays for some time now. It appears that a continuing series of no votes by institutional shareholders is one of the few options open for meaningful engagement at Barclays.” But the bank faced huge criticism at today’s meeting. Kieran Quinn, chairman of the Local Authority Pension Fund which represents funds totalling £120 billion, said: “There have been significant concerns expressed by LAPF over governance and executive remuneration at Barclays for some time now. It appears that a continuing series of no votes by institutional shareholders is one of the few options open for meaningful engagement at Barclays.”
Walker told the meeting that he fully understood shareholders’ concerns particularly over remuneration. He told them: “Management is here to serve shareholders not the other way round.”Walker told the meeting that he fully understood shareholders’ concerns particularly over remuneration. He told them: “Management is here to serve shareholders not the other way round.”
Shareholders were set to back Barclays’ plans to double the ratio of bonuses to basic pay to get round new European rules which fix them at one to one. But they were expected to register protest votes over the remuneration report, and in particular over the re-election of Sir John Sunderland who chairs the remuneration  committee.
He steps down from that role shortly to be replaced by City grandee  Crawford Gillies. However, Sunderland is leading the process to find a new chairman — something which many investors, including the LAPF, find questionable.
Quinn asked: “How can it be appropriate for him to lead the selection of Barclays’ new chair to replace Sir David Walker?”
Outside the meeting at the Royal  Festival Hall protesters from the World Development Movement were dressed as eagles, riding Barclays Boris bikes and carrying coal in their cycle baskets with placards reading “Barclays: Stop bankrolling coal”.Outside the meeting at the Royal  Festival Hall protesters from the World Development Movement were dressed as eagles, riding Barclays Boris bikes and carrying coal in their cycle baskets with placards reading “Barclays: Stop bankrolling coal”.
They claimed that Barclays has  provided £3.1 billion to the coal  industry since 2005, which has driven climate change. Another protester, David Hillman from the Robin Hood Tax campaign, urged action to tackle poverty and said:“It is stomach-churning to think that in the five scandal- ridden years since the crisis Barclays has doled out such grotesque  levels of pay to their privileged few.”They claimed that Barclays has  provided £3.1 billion to the coal  industry since 2005, which has driven climate change. Another protester, David Hillman from the Robin Hood Tax campaign, urged action to tackle poverty and said:“It is stomach-churning to think that in the five scandal- ridden years since the crisis Barclays has doled out such grotesque  levels of pay to their privileged few.”